As we discussed yesterday on CreditBloggers, the upcoming holiday season can be very expensive. If you are feeling the holiday spending pinch, you may think about using a payday loan to get extra cash. Payday loan companies advertise cheap and easy access to emergency cash but the costs are very high. The APR on a payday loan is usually in the 500% range and can go as high as 5,000%. Instead of helping you with your financial issues, payday loans often exacerbate the problem and leave you deeper in debt. If you are facing a financial crunch this fall, consider these alternatives to payday loans:
- Borrow money from your savings account
- Ask a relative to lend you the money
- Apply for a traditional small loan
- Ask your creditor for more time to pay a bill
- Use a cash advance on your credit card
- Negotiate a payment plan with the creditor
- Charge the amount to your credit card
- Receive an advance from your employer
- Use your bank’s overdraft protections
- Obtain a line of credit from an FDIC approved lender
If you have evaluated all of your options and decide a payday loan is right for you, be sure to understand all the costs and terms before you apply.
- Shop around for a trusted payday lender that offers lower rates and fees.
- Borrow only as much as you know you can pay back with your next paycheck.
- When you get paid, your first priority should be to pay back the loan immediately.
You can read more information about payday lending in this article: The Truth About Payday Loans